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Energy transitions, feasibility studies and the limits of abstraction: the case for a (soft) systems approach

As noted in my introductory post, over the past five years a number of prominent reports have concluded that transition from fossil-fuelled to renewably-powered economies is technically and economically feasible on national and even global scales, without need for change in the cultural landscape. They conclude that entire national energy infrastructures can be replaced—over periods ranging from 10 to 40 years—with little need for us to adjust our socio-economic expectations. In fact, given the roles assumed for large-scale centralised infrastructure in these studies, relatively few of us would need to be involved in the actual implementation, let alone decision making, planning and co-ordination. A common message seems to be that we shouldn’t expect to be inconvenienced by these technologically significant but socially, culturally and economically benign changes.

To most observers, presentation of such findings in the language of technical and economic feasibility may pass without much remark. From an engineer’s perspective though, it raises a flag. Technical and economic feasibility have quite a specific meaning in engineering parlance—in essence, this means that a) sufficient work has been done to be confident that overall cost will fall within a specified range; and b) that following from this, financiers’ expectations with respect to return on investment can be met. To be clear, none of the studies that I’m thinking of actually make such claims directly—this is just what is usually expected for infrastructure projects on the scale of millions through to multiple billions of dollars, prior to commencing engineering design. Given the enormous scale of the proposals we’re talking about—from hundreds of billions of dollars upwards—then they’d surely be expected to conform with established conventions in this respect. At least, this would be the case if approached as top-down, centrally-administered engineering projects. You may well query, though, why I’d assume such an approach. Given the unprecedented nature and scale of the proposals perhaps they would demand a fundamentally different approach to that which suits, say, construction of a single power station. That’s a question I’ll return to in due course. For now though, I’m simply taking my cue from the nature of the reports themselves, and the general method on which they are based: aggregation of generic public-domain data from a wide range of primary and secondary sources, along with original work involving a variety of desk-based modelling techniques.
At this point I’ll give a run down of the sequence of steps through which a typical commercial-scale engineering project proceeds, as a point of reference with which to compare the recent reports. My own personal experience with this is in the context of high-temperature metallurgical plants such as copper smelters, but it applies more generally.

Scoping study

Once a project opportunity is identified on the basis of perceived market or social need, the first step is usually to carry out an order-of-magnitude conceptual or scoping study. The point of this is to decide with minimal resource expenditure whether it’s worth proceeding to a more detailed—and costly—study. Typical methodologies here involve scale-up from demonstration plants that have conclusively proved the proposed technologies in “real world” conditions for an extended operating period. This step may be very straightforward—even of a back-of-the-envelope nature—if the opportunity being considered involves close-to-replication or limited scale-up (or –down) of a successfully completed project. In such situations, the existing project provides the demonstration basis, but even then the specific institutional context for the new proposal needs to be taken into account, as this is just as important as financial considerations in assessing economic viability. At this early stage, it’s typical to make many broad assumptions—this is fine, provided they’re explicit and their basis is clear. An important purpose of a scoping study is to identify the work that would need to be done later to reduce uncertainty around these assumptions to an acceptable level, so that this can be costed in. At the conclusion of this scoping stage, there will be a go/no-go decision point—so the aim is not simply to paint the opportunity in the best possible light, but rather in the most realistic light by recognising and declaring uncertainties. The overarching intent of a scoping study is to assess and describe the circumstances under which the project opportunity could be feasible—rather than concluding that it will be feasible.

Pre-feasibility study

If the scoping study indicates sufficient value in proceeding, the next step is to conduct a pre-feasibility study. As the name suggests, the point of this step is to inform a decision about proceeding with the significant resource commitment of a full feasibility study. This is typically carried out to an accuracy of +/-25 percent. Pre-feasibility is the first point at which context-specific engineering design is carried out for the actual plant or infrastructure involved, rather than basing estimates on similar situations elsewhere. Typically this takes the form of basic process design based on local site conditions, sufficient to estimate sizes of major equipment, buildings, materials, operating requirements and site services. This work will be aimed at addressing critical assumptions from the scoping study. As with the scoping stage, this is followed by a go/no-go decision i.e. completing a pre-feasibility study does not necessarily mean that the project will proceed.

Feasibility study

This is the final step before deciding whether to proceed with project implementation—or at least, raising finance. Where the project would involve seeking commercial finance (rather than being financed by the proponent directly), this is usually referred to as a bankable feasibility study, typically carried out to an accuracy in the order of +/-15 percent. The aim is to: a) consider the prospects for addressing technical feasibility challenges, including specific aspects of technical novelty associated with the project; b) develop estimates of capital and operating costs to within the specified accuracy, so that the proposed project can be assessed against economic feasibility criteria; and c) consider prospects for successful implementation in the context of a wide range of institutional feasibility constraints. As a general philosophical point, feasibility studies are intended to provide the information that is needed for assessing feasibility, rather than drawing conclusions about this. As with previous steps, a go/no-go decision follows.

Implementation steps

If a project proceeds forward after this point, then if finance is successfully raised, it will typically follow a sequence running from basic engineering design, to detailed engineering design, tendering, construction, commissioning and normal operation.

The general model that I’ve sketched out here (and there are plenty of variations on this in practice) has developed in the context of relatively discrete projects—individual plants or pieces of infrastructure. While often very large, even many multi-billions of dollars, these tend to involve incremental changes to parts of existing systems, rather than wholesale systemic change. As such, they’re relatively amenable to the traditional hard systems engineering approach, based on top-down planning and centralised control, that aligns with the sequential, expert-driven assessment process I’ve described. Checkland & Poulter in their book Learning for Action characterise such approaches as “tak[ing] seriously the ability of human beings to define precise objectives and then to organise activity to achieve the optimum state of: ‘objectives achieved’. The image is of human beings (and organizations) as goal seeking and optimizing.”[1] This can work effectively in some areas of human activity, particularly where stakeholders share a similar view of the goals to seek and optimum outcomes. In engineering projects, this is often taken as the default starting point, with any differences of view treated as manageable from within that default image of social reality itself.

It’s far from clear though whether the same hard engineering approach could realistically be extended to initiatives so far reaching in scope that their implementation would entail fundamental changes to the techno-economic context within which their own feasibility was assessed. And in the case of replacing not just electricity supplies but entire energy infrastructures on national scales, this is the sort of situation we’d be dealing with. While the now-essential infrastructure of modern industrial societies—such as electricity grids powered by centralised generators—often commenced life via system-wide rapid rollouts, the present configurations of such systems are a result of more gradual processes of evolution, in which infrastructure changes are structurally coupled with social, economic and cultural changes. That is, the infrastructure changes and institutional changes are intertwined, and it may not be particularly meaningful to tease the threads apart as independent phenomena—change one aspect, and we inevitably change others that in turn affect it. Given the inevitable feedback loops involved, we should expect the unexpected, and that means starting from a position of considerable uncertainty.

It’s perhaps not surprising that the top-down planning approach encapsulated in the project sequence that I introduced above would be an attractive default model for thinking about economy-wide transition from fossil fuels to renewable energy sources. For one thing, this approach has a rather well established track record of success in relation to large engineering projects—in fact, it can be argued that its expert-driven rational objectivity is a corner stone of industrial society’s instrumental success in general. This is an essential part of the means by which industrial techno-culture has wielded such effective influence over both the human and non-human worlds. To some extent it’s understandable that changes of the nature being considered might be envisaged as just a “conventional engineering project” writ large.

But there’s also another aspect to this. The great success of hard systems engineering techniques exercised via a linear sequence of steps in the manner I’ve outlined tends to reinforce the idea that abstract reasoning conducted by experts is the ultimate source of legitimate knowledge in relation to matters of this nature. There is a problem with this though: it reflects only a partial view of what is actually going on in the conventional approach. What appears to be abstract reasoning in isolation is better understood as one aspect of a learning system that also encompasses concrete experience. The engineer’s abstract tool kit is built up from innumerable rules-of-thumb derived from direct experience in real-world situations. And the encounters with particular real-world situations occur in the context of abstract theorising about such situations in general. Abstract theorising sets the context for concrete experience, which in turn sets the context for abstract theorising. The expertise of engineers, as with other professionals, derives from the history of individual and social experience in which they are immersed.

This is the central problem with taking the conventional engineering approach as a template for describing and assessing a systemic change process—such as a whole-of-economy energy transition. We simply don’t have the sort of precedent base of concrete experience that the hard engineering approach depends on for its success. I can imagine that a counter to this from proponents of the hard engineering approach might be that their own analysis confirms that the proposed transitions are in fact not outside the reach of their approach. Such a justification though would be based on a circular and self-serving argument: assume that the preferred or available tool is the right one for the job; apply that tool and get a favourable result in terms of what it does do well; take this as confirmation that the tool is the right one for the job. But what answers might we get if we ask the question differently, ask a different question, or seek out alternative methods for arriving at answers? Here lies the great challenge faced by abstract reasoning applied at too great a remove from the situations it attempts to deal with: in abstracting away from the realm of particular, concrete situations, how should we decide what is and is not relevant?

The point that I’m hoping to draw out here is not that the answers in the recent studies are wrong—rather, that the original questions may not be the only—or the most important—ones that need to be addressed. Addressing the situation we’re interested in is not just a matter of the accuracy of the analysis conducted; more fundamentally, it is a matter of the nature of the analysis that we apply to the situation. Determining the most appropriate style of analysis for the situation we’re dealing with is not a task for that analysis itself. For this we need to appreciate the worldview with which we’re approaching things, and ideally, some of the alternative worldviews that might be adopted.

Where does this leave us? In moving beyond the limits of the hard systems engineering worldview—where people and organisations are regarded in terms of goal seeking and optimisation—we do have other well established options. This is the domain that ‘soft’ systems—and more generally, action research—approaches deal with. The soft systems worldview doesn’t reject the hard systems values of seeking objectives and engineering optimum outcomes. Rather, it treats them as special (i.e. more contextually limited) cases within the broader concepts of sustaining relationships and learning. The primary shift in the soft systems approach is to locate the technical problems of conventional engineering within a broader view of social reality in which our primary interest is to sustain relationships and to learn. The significance of these values in thinking about large-scale socio-economic transitions will hopefully be apparent. What we ultimately need is not just new infrastructure, but to seek new social, economic and cultural arrangements that work for people without depleting—and better yet, that are capable of enhancing—social capital and wellbeing. In the most straightforward of terms, we’re faced with a broader task of learning how to live well, together, in the face of emerging energetic challenges to established ways of life. For Checkland & Poulter, this entails shifting

away from a static view of social reality (ignoring worldviews) as something ‘out there’ which can be studied objectively by an outside observer as if social reality were similar to natural phenomena, to a process view (encompassing worldviews) which sees social reality as something continuously being constructed and reconstructed by human beings in talk and action. [2]

This approach is closely aligned with the overall way of thinking about energy and society that I intend to explore over the coming months. It’s my contention that this will serve us far better than a narrower techno-centric approach, along the lines of that for which my own training as a mechanical engineer prepared me.

In wrapping up, there’s a final matter that I’d like to look at in relation to the reports that prompted the discussion here. Let’s set aside for now questions of how adequate the conventional hard engineering project approach is for dealing with transitions of the nature proposed. Instead, let’s assume the conventional approach as given, and consider where those proposals would fit within the typical project sequence. If we take as our starting point a worldview in which feasibility criteria can be adequately defined and addressed through desk-based engineering and economic studies, how do the reports published in recent years stack up against established norms? On my own reading of the prominent reports from Greenpeace, Beyond Zero Emissions and WWF, these appear equivalent to what in conventional engineering practice would be regarded as scoping studies and in one case extend perhaps to pre-feasibility stage. That is, they’re based on general assumptions about possible and preferred future energy use patterns, and they look at how these assumed patterns could be met with existing generic technologies within relatively conventional institutional contexts. What I would regard as the most comprehensive of the studies, Beyond Zero Emission’s Zero Carbon Australia Stationary Energy Plan considers the generic technology in the context of local conditions for principal design parameters such as solar radiation and wind regimes. The study goes so far as to propose the general layout for clusters of solar thermal ‘power tower’ plants that could provide an overall net electricity output from a given location. In this respect, the authors deal with matters that on my reading would be most accurately characterised as pre-feasibility level.

The overall impression though is of early-stage work that would not yet be regarded as satisfying the needs of conventional technical and economic feasibility assessment. While none of the studies make claims of ‘bankable’ level accuracy i.e. in the order of +/-15 percent, it’s quite apparent that none of the proposals in their present form would meet the stringent requirements of financiers. In this respect, any claims regarding ‘technical and economic feasibility’ should be read with plenty of healthy scepticism.

There is one other issue of concern that bears highlighting. From an engineering perspective, let alone with my futures studies and foresight practitioner’s hat in place, the treatments of uncertainties raises a serious warning flag in relation to each of these reports. In short, there is almost no consideration given to the substantial uncertainties that inherently accompany studies of this nature. To underplay discussion of the uncertainties in fact marks the reports as less serious documents than they purport to be. Whether the result of naivety or obfuscation, this omission is a serious flaw in each report: the reader should be able to see at a glance what is not yet sufficiently well established by the work, as well as what is well established. Moreover, the reader should be in a position to make their own assessment in relation to claims of sufficient and insufficient certainty, rather than taking the proponents’ own assessments at face value.

Perhaps such an expectation could be viewed as unrealistically naïve on my part. Even so, we would surely all be better positioned to understand the prospects for large-scale renewable energy transitions if studies like this made their uncertainties as transparent as possible. Without this, the work seems to read more as advocacy for an established position than a clear-eyed and critically-attuned appraisal of our possible energy futures. It’s the latter for which we’re desperately in need. Once again, attention to worldviews is essential to high-quality work in this domain. In striving to carry out work of such quality, not only is it important that we’re open about what we cannot predict with certainty, we also need to acknowledge that the complexities we’re dealing with—especially those that originate in our very human ways of making meaning and learning—entail that we should expect the unexpected, and proceed accordingly.

This means that, rather than clinging to the expectation that we can predict and control what will unfold as we embark on systemic change, we would be better off to develop ways of proceeding that recognise and accept the limits of prediction. ‘Soft systems’ approaches are a better prospect in this regard. More generally though, systems—or dialectical—ways of engaging with questions of energetics and societal futures offer deeper insights into the situations we collectively face, and greater flexibility of response. Attempting to foster such ways of proceeding is my broader purpose here. I hold a serious concern that premature certitude about the prospects for smooth transition from fossil-fueled to renewably-powered economies might lead to public disengagement from matters that stand to have very significant implications for us all. I would like to encourage greater, not lesser engagement with these matters. In the end, might an open and transparent presentation of uncertainties in fact strengthen proposals for renewable energy transition?

Just to be clear: none of this should be read as ‘anti-renewable energy’ or as rejecting the great importance of a shift to renewable energy-based economies. As a commuter cyclist, an investor in a community wind farm and a board member of an organisation that demonstrates and participates in R&D for renewable energy technology, I long ago embraced the need for such a shift with enthusiasm. There are open questions though with respect to the forms that renewable energy futures for humanity could and should take. High-quality responses to these questions demand greater participation from those of us who stand to be affected by them—that is, by all of us. We should avoid approaches to the questions that close down discourse prematurely.

In the next post, I’ll kick off the first major theme of this blog: a discussion of what energy is ‘all about’, in order to lay down foundations for considering broader questions of societal futures. Our starting point will be the very abstract nature of energy, and the difficulties this poses for sharing understanding when it comes to energy issues. The approach will likely challenge some established views; I hope you’ll join me.